by Bill Singer
In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in October 2010, Claimants asserted causes of action including fraud, suitability, negligence, and failure to supervise in connection with Respondents’ alleged failure to analyze whether the proposed purchase and sale of variable annuities, including but not limited to John Hancock, Pacific Life, Jackson National Life, Travelers, and Allianz would cause Claimants to lose existing benefits. Initially, Claimants sought
- rescission of all transactions that occurred in Claimants’ portfolios in 2010;
- at least $250,000.00 in compensatory damages;
- punitive damages;
- pre- and post-judgment interest at the applicable statutory rate;
- costs and forum fees;
- attorneys’ fees; and
- such other relief as the Panel deemed just and equitable.
At the close of the hearing. Claimants requested $156,000.00 in professional fees and $294,000.00 in losses, commission returns, managed fees, returns, general fees and costs. In the Matter of the FINRA Arbitration Between Winifred B. Loria and Roger M. Loria, Individually, and on behalf of the Immunitas, Inc. Retirement Plan; Dr. Roger Loria IRA; and Mrs. Winifred Loria IRA, Claimants, v. Elmer Wayne Bullis; Arnold Dorman; and Next Financial Group, Inc., Respondents (FINRA Arbitration 10-04782, May 8, 2012).
Bill SingerContributor
Respondents generally denied the allegations and asserted various affirmative defenses.
Not So Expert
During the evidentiary hearings, Respondents moved to preclude Claimants’ expert witness from testifying based upon the assertion that the expert was not qualified. Following an objection by the Claimants, the FINRA Arbitration Panel denied the motion.
At A Loss?
At the conclusion of Claimants’ case-in-chief. Respondents moved to dismiss, arguing that the current value of the disputed investment was higher than the loss at issue. Claimants countered that the Panel should not look at the amount of the loss at the time of the hearing but rather at the time the investment was made. The Panel denied the motion, which was subsequently renewed at the close of the hearing and, once again, denied.
AWARD
The FINRA Arbitration panel found Respondents jointly and severally liable and ordered them to Claimants:
- $75,000 in compensatory damages;
- $150,000.00 in punitive damages as provided under Virginia law for negligence and equitable reasons.
Bill Singer’s Comment
Like a bad penny, yet another variable annuity case turns up. Not only are these VAs generating a cottage industry of customer litigation but the regulators have served notice that their patience is at an end with many troubling marketing practices.
See these articles about variable, equity-indexed, and other annuities:
- SEC Publishes Superb Consumer Guide: Variable Annuities: What You Should Know (May 7, 2012)
- FINRA Rejects A New York State Of Mind When It Comes To New Jersey Annuity Signatures (May 9, 2012)
- Broker Impersonates Former 83 Year Old Client In Annuity Withdrawal Request (April 20, 2012)
- Broker Fined And Suspended For Equity Indexed Annuities and Whole Life Outside Business Activities (April 13, 2012)
- Broker Suspended and Fined for Misrepresenting Variable Annuity Guaranteed Rate of Return(February 15, 2012)